"What we have witnessed over the past year is the dawn of a second wave of digital transformation sweeping every company and every industry", Microsoft CEO Satya Nadella said in a canned statement. "Building their own digital capability is the new currency driving every organization's resilience and growth". With more people slowly going back to work and Microsoft's hybrid on-premises cloud solutions holding steady, it'll be interesting to see if the company can shock again in a few months.
Microsoft's largest division by revenue was More Personal Computing, including Windows and Xbox, which posted $15.1 billion in revenue, up 14%. During the last quarter, we were surprised that Microsoft managed a 30 percent profit increase. Not surprisingly, the company also saw a 40 percent increase in Xbox content ands services, as well as an 86 percent increase in Xbox hardware sales, both thanks to the release of its next generation consoles.
The software giant's overall revenue rose to $43.08 billion in the second quarter ended December 31, from $36.91 billion a year earlier, beating analysts' estimates of $40.18 billion, according to IBES data from Refinitiv. Windows Home revenues were up 24 percent, but Windows Pro revenues declined by 9 percent and Windows revenues from PC makers only grew 1 percent despite all the pandemic-related buying. In addition, Microsoft's aggressive pricing and low tier entry Surface devices are resonating with its commercial base as its Surface revenue growth outpaces its Windows 10 OEM partner licensing growth.
Server products and cloud services revenue increased 26% driven by Azure revenue growth of 50%. Analysts expected Microsoft's revenue for the December quarter to top $40 billion, up 8.9%, with profits of $1.64/share, vs. $1.51/share a year ago. Microsoft 365 consumer subscribers grew 28 percent to 47.5 million in the quarter.